The 2014 Pension 40: Caitlin Long

Even after Caitlin Long, Morgan Stanleys head of
corporate strategies and pension solutions, advised on
pension-risk-transfer deals for General Motors Co. and Verizon
Communications in 2012, she remained uncertain about what the
two transactions meant for corporate America and retirees. Now
that she has helped Motorola Solutions and Bristol-Myers Squibb
Co. pull off similar deals, Long says the ball is
rolling for U.S. companies transferring pension
obligations to insurers. New mortality tables from the Society
of Actuaries, which Morgan Stanley estimates raise
companies liabilities by 4 to 10 percent, was a
triggering event. Motorola settled $3 billion in pension
obligations for 30,000 employees with Prudential Financial at
par, meaning it transferred assets to the insurer without
paying a premium; its stock rose 2.5 percent the day of the
announcement. Corporate America is going down this path
because of the economics, says Long, 45, who started her
financial career in life insurance equity research at Credit
Suisse. Insurance companies have more scale than any
single corporate pension fund, and they can offset longevity
risk with their life insurance business. No corporation has
that natural hedge. Though Bristol-Myers didnt
disclose the economics of its $1.4 billion transaction, its
plan was overfunded at the end of 2013, and the drugmaker
didnt have to contribute cash to settle the deal. New
Yorkbased Long, 45, has a JD and a masters in
public policy from Harvard University. Shes been focusing
on pensions since thenMorgan Stanley CEO John Mack
offered her the pension position in 2007.

An allocation to international bonds exposes Target Retirement Fund investors to an asset class thats not only influenced by different interest rate and inflation dynamics than U.S. bonds, but which also provides a larger opportunity set of credits.